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However, earnings per share declined 52.0% year over year as earnings in the prior-year quarter included a net tax benefit of $71.5 million (generated from a reversal of deferred tax asset valuation allowances) while the reported quarter included a tax expense.

Total revenue in the fourth quarter of 2013 amounted to $536.2 million, up 47.1% year over year, on the back of a double-digit increase in home closing revenues and average selling prices. Reported revenues were in line with the Zacks Consensus Estimate.

Quarter in Detail

Meritage’s home closing revenues were $533.5 million, increasing 47% from the prior-year quarter. Year-over-year growth in home closing revenues was attributable to an 18% increase in the number of homes closed and a 24% hike in average closing prices.

Net sales orders climbed 3% year over year to 1,131 units during the quarter, reflecting sales order gains across all states except California and Florida. The value of net orders rose 17% to $414.6 million owing to a 13% hike in average prices.

The company started raising prices in most of its communities with market demand gaining momentum. Accordingly, the average selling price of the closings shot up 24% in the quarter to $363,000

Meritage’s backlog totaled 1,853 homes as of Dec 31, 2013, up 26% from 1,472 homes as of Dec 31, 2012. The value of backlog grew 43% year over year to $686.7 million in the quarter, owing to stronger demand and a 14% increase in prices.

Meritage’s adjusted home closing gross margin expanded 430 basis points year over year to 23.2% in the fourth quarter of 2013, driven by optimization of costs of sales and price appreciation.

Full Year 2013

Meritage Homes’ full year 2013 earnings per share of $3.25 beat the Zacks Consensus Estimate of $3.08 by 5.5% and the prior year levels of $3.00 by 8%. The company achieved earnings beat on the back of a solid increase in the top line.

Total revenue in 2013 amounted to $1.81 billion, up 52% year over year, on the back of a double-digit increase in home closing revenues and average selling prices.

2014 Outlook

Meritage believes that with the improvement in overall economy, job market and historically low mortgage rates, housing demand will continue to increase. The company expects community count in the range of 210 – 220 by the end of 2014.

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